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Hospital Payment Reform Overview, Forecast, and Strategies for Success

Nell BuhlmanSVP, Clinical and Analytic Services

2© 2015 Press Ganey Associates, Inc.

Reducing Suffering & Promoting a Culture of High Reliability through Alignment & Engagement

Payment Reform Overview

Hospital Pay‐for‐Performance Programs:

• Value‐Based Purchasing

• Readmissions Reduction Initiative

• Hospital‐Acquired Conditions

Alternative Payment Models

• Accountable Care Organizations

• Bundled Payment Programs: Comprehensive Care for Joint Replacement

Strategic Imperative

Agenda for Today

1

2

3

4

Payment Reform Overview1


The ACA in 31 Words

Key Elements (in no particular order)Key Elements

(in no particular order)Major

ComponentsMajor

ComponentsObjectivesObjectives

Triple Aim:

Better CareBetter HealthLower Cost

Insurance Reform

Collaboration

Coordination

Accountability / TransparencyPayment Reform Patient Engagement

Efficiency

Evidence‐based care

Data Sharing

Delivery Reform


No Setting Untouched

HOSPITALS MEDICAL GROUPS

At Risk: 9+% Meaningful Use PQRS/CGCAHPS Physician VM MACRA: MIPS (4‐

9%; +5% bonus potential)

ACCOUNTABLE CARE ORGANIZATIONS

Shared Risk ACO CAHPS PQRS Next Gen ACO

HOME HEALTH

AMBULATORY SURGERY DIALYSIS HOSPICE

Note: Hospitals and medical group payment risk is a percentage point reduction to the fee schedule or DRG. All other providers risk is a percentage point reduction to the annual payment update or market basket update.

At Risk: 2% LTCH‐QR

At Risk: 2% SNF‐QRP (SNF VBP)

SKILLED NURSING

At Risk: 2% IRF‐QR

LONG‐TERM CARE REHAB HOSPITALS

At Risk: 8+% IQR,OQR VBP/HCAHPS Readmissions HACs Meaningful Use IPFQR (ED CAHPS) CJR Bundles (20%)

At Risk: ‐ Oncology

Bundled Payments

ONCOLOGY

At Risk: 2% OQR (OAS CAHPS)

At Risk: 2% HH‐CAHPS HHQR HH VBP (5‐

8%)

At Risk: 2% ICH‐CAHPS ESRD‐QIP

(VBP) ESRD ACO

At Risk: 2% Hospice CAHPS HQRP


Paying for Value

~20% 30%50%

75%

55%

40%

15% 10%

2014CMS

2016CMS

2018CMS

2020Private Payer

Value‐Based Arrangements

FFS

Alternative Payment Models

(ACO, CPC, BPCI*)

TraditionalFFS

*Value‐Based Purchasing, Merit‐based Incentive Payment System, Readmissions Reduction Initiative, Hospital‐Acquired Conditions, Accountable Care Organizations, Comprehensive Primary Care Initiative, Bundled Payments of Care Initiative

55‐60%

25%20‐25%

Quality or Value‐Based FFS

(VBP, MIPS, RRI, HAC*)


Four Medicare Payment Methods,Three Require Measurement of Quality

Source: Press Ganey analysis; Rajkumar H, Conway PH, Tavenner M. CMS – engaging multiple players in payment reform. JAMA 2014; 311: 1967‐8. HCPLAN Alternative Payment Model Framework and Progress Tracking Work Group.

*New for 2015/2016*New & mandatory

• Payment based on volume

• Not linked to performance

• A portion of payment based on performance

• Some payment linked to episode of care of care or management of a population

• Risk/gain sharing

• Payment not triggered by service delivery

• Providers paid and responsible for the care of a beneficiary

• Limited in Medicare FFS

• Hospital VBP• Readmissions

Reduction Prog• HAC• MIPS• Home Health VBP

• ACOs• Bundled Payments• Comprehensive PC

Initiative• Comprehensive ESRD• CJR

Eligible Pioneer ACOs in years 3‐5

Next Generation ACOs in certain tracks

Maryland hospitals

Descrip

tion

Exam

ples


Challenges Common to all the Reform Initiatives

Fluid scope challenging to measure fairly– Expanding areas of interest– Removal of topped‐out measures– Influence of “other providers” on performance

Aspects of performance evaluated in more that one program– Double jeopardy for poor performers– “Unmeasured” factors impact performance across programs

Initial thresholds and benchmarks set extremely high Thresholds and benchmarks rise over time as performance improves

across the board

Hospital Payment Reform Programs2

Hospital Value‐Based Purchasing


VBP Domain Weighting Changes 2013-2018

2% at risk

25%

10%

40%

25%

1.75% at risk 5%

25%

45%

25%

30%

20%30%

20%

1.5% at risk

30%

45%

25%

1.25% at risk

30%

70%

1% at risk

Core Measures

2013 2014 2015

FY 2016 FY 2017

25%

50%

25%

2% at risk

(Based on 2016 Performance)

FY 2018

Process of Care Patient Experience Outcomes and Safety Efficiency


Aligning VBP with National Quality StrategyFY 2017 VBP Measures

• Hospital Consumer Assessment of Healthcare Providers and Systems Survey (HCAHPS)

• Catheter‐Associated Urinary Tract Infection (CAUTI)

• Central Line‐Associated Blood Stream Infection (CLABSI)

• Clostridium difficile Infection*

• Acute Myocardial Infarction (AMI) 30‐day mortality

• Heart Failure (HF) 30‐day mortality• Pneumonia (PN) 30‐day mortality rate

National Quality Strategy

1. Safety

4. Effective Clinical Care

5. Population Health

2. Patient & Caregiver Experience

3. Care Coordination

6. Efficiency & Cost Reduction

• MRSA*• Complication/patient safety for

selected indicators (PSI‐90 composite)• Surgical Site Infection: Colon,

Abdominal Hysterectomy

• Fibrinolytic Therapy Within 30 Mins• Influenza Immunization• Elective Delivery Prior to 39 Completed

Weeks Gestation*

• Medicare Spending per Beneficiary

*Newly adopted measure for FY 2017


Lower scores Higher scores

Achievement threshold(Median)

Benchmark(Mean of Top Decile)

Measurement & Payment Methodology

Providers receive FFS payments, minus a yearly holdback (-1.75%) that can be earned back based on VBP Score.

Each measure scored on achievement and improvement 0 to 10 achievement points

(how far into achievement range) 0 to 9 improvement points

(how much improvement from baseline) Higher of the two used for VBP Score

14

Threshold and Benchmark Levels Continue to Rise

Threshold (50th Percentile) Benchmark (95th Percentile)

HCAHPS Overall Rating of Hospital

© 2013 Press Ganey Associates, Inc.

20

30

40

50

60

70

80

90

CMS FY2013

CMS FY2014

CMS FY2015

CMS FY2016

CMS FY2017

*CMS FY2018

20

30

40

50

60

70

80

90

CMS FY2013

CMS FY2014

CMS FY2015

CMS FY2016

CMS FY2017

*CMS FY2018

8 pt. increase

2 pt. increase

15

HCAHPS: Holding Steady = Losing Ground

Maintaining Status Quo is Not Sufficient

2008 2013201220112009 2010

8987

83

80

76

73

6%

Mean: 63.4%

Mean: 69.3%

30 40 50 60 70 80 90 100

Average HCAHPS Performance Increased 6%

2008 2013Percent of Patients that Rate Your Hospital a 9 or 10 Percentile Rank if 75% of Your Patients Rated

Your Hospital a 9 or 10


Effects of Increasing Slope of Exchange Function

0 10 20 30 40 50 60 70 80 90 100

VBP Points

Perc

ent o

f Inc

entiv

e Ea

rned

0

10

2

0

30

4

0

50

60

70

8

0

90

100

High performers come out ahead

Final slope dependent upon hospital performance and

amount at risk


Readmissions Reduction Initiative


Readmissions Reduction Initiative

Incentive/Penalty – Penalty in the amount of excess payments associated with excess readmissions. DRG operating payment penalty cannot exceed the stated cap for the year:

1% in FY 2013 2% in FY 2014 3% in FY 2015 3% in FY 2016

Measurement Areas of Interest Excess readmissions for

AMI, HF, PN Chronic Obstructive Pulmonary Disorder Hip & Knee Arthroplasty Coronary Artery Bypass Graft (CABG) (New for FY 2017)

Penalty Focus: Excess costs associated with excess readmission

Readmission Rate

(Obs /Exp Readmits) ‐1

ReadmissionsExcess

ReadmssionsDRG

AmountMedicare Excess

PaymentHeart Failure 34.40% 0.4041 333 137 $5,539.00 $745,323.00

AMI 20.30% 0.0151 53 1 $8,068.00 $6,325.00Pneumonia 21.50% 0.1813 131 24 $5,532.00 $131,400.00

$883,048.00

Total Meciare Excess Payments $883,048.00Total Inpatient Operating Payments $37,713,697.00

Excess to Total Ratio 0.0234Adjustment Factor 0.9766

2013 Capped Adjustment Factor 0.99

Uncapped 2013 Impact $883,048.00Capped 2013 Impact $377,137.00 Potential 2013 Impact


Improving on Readmissions

All Cause Readmission Rates in U.S. 2011-2015

16.30%

15.80%

15.40%15.50%

15.40%

15.00%

15.20%

15.40%

15.60%

15.80%

16.00%

16.20%

16.40%

CY 2011 CY 2012 CY 2013 CY 2014 CY 2015*

National

Condition-specific Readmission Rate Trends


Hospital Acquired Conditions Initiative

Medicare Hospital-Acquired Infections

Incentive/Penalty – 1% reduction of base operating DRG payment for hospitals in top quartile of HAC occurrence to continue

Y

HAC Performance

2015 HAC ScoreScore range 0‐10; lower is better

2015 HAC 1% Penalty?

7.03

-1%

Note: For FY2015, Hospitals with HAC scores greater than 7.024 received a penalty.

Measurement Areas of InterestSafety Domain 1 (25%) – PSI‐90 Composite: Pressure ulcer (PSI 3) Iatrogenic pneumothorax (PSI 6) Venous catheter‐related bloodstream infection (PSI 7) Postoperative hip fracture (PSI 8) Postoperative pulmonary embolism or DVT (PSI 12) Postoperative sepsis (PSI 13) Wound dehiscence (PSI 14) Accidental puncture or laceration (PSI 15)

HAC Domain 2 (75%) 5 measures: Catheter‐Associated Urinary Tract Infection Central Line‐Associated Bloodstream Infection Surgical Site Infections – new for payment impact FY16 MRSA – new for payment impact FY17 Clostridium difficile – new for payment impact FY17


17% Reduction in HACs, 2011-2013

Source: AHRQ: Interim Update on 2013 Annual Hospital‐Acquired Condition Rate and Estimates of Cost Savings and Deaths Averted From 2010 to 2013


Largest Improvements in ADEs, Pressure Ulcers

Deaths Averted:1. PUs (20K)2. ADEs (12K)3. Other HACs (6K)4. CAUTI (4K)5. Falls (3K)6. CLABSI (2K)7. SSI (1K)

Alternative Payment Models3

Accountable Care Organizations

MSSP and Pioneer ACOs Across the U.S.

Source: CMS; current as of April 2015

Not just Medicare—the rising total of ACOs includes about 300 private payer ACOs

4165 81 97

138 148

208

334356

458479 489

606

0

100

200

300

400

500

600

700

Q4

20

10

Q1

20

11

Q2

20

11

Q3

20

11

Q4

20

11

Q1

20

12

Q2

20

12

Q3

20

12

Q4

20

12

Q1

20

13

Q2

20

13

Q3

20

13

Q4

20

13

# o

f AC

Os

Total Accountable Care Organizations (2010 - 2013)

# of ACOs


Quality Performance Used to Determine Shared Savings

ACOs required to collect 33 quality measures that will increase or decrease their shared savings depending on scores

• Performance year 1, CMS requires reporting of all measures

• Performance year 2 pay‐for‐performance applies to 25 measures

• Performance year 3 pay‐for‐performance applies to 32 measures

• ACOs must attain a minimum performance on each measure equal to the national 30thpercentile level of performance of FFS or Medicare Advantage quality rates

• ACOs must achieve quality performance of at least 70% in each domain

7measures of patient/ caregiver experience

10measures of care coordination/patient safety

8measures of preventive health

8measures of at‐risk populations


Medicare Shared Savings Program Growing

Medicare ACOs established to date; in January 2016, 147 ACOs renewed agreements534

22

7.7M

180,000 physicians and practitioners in ACOs in 2016

Medicare beneficiaries receive care from providers in ACOs

ACOs in performance based risk tracks, including 16 in new Track 3


One of best features of ACOs is strong quality measurement, CMS says

ACOs reporting results in 2013 & 2014 improved average performance on 27 of 33 quality measures. Marked improvement shown in metrics such as:

Patients’ ratings of clinicians’ communication Beneficiaries rating of their doctor Screening for tobacco use and cessation Screening for high blood pressure Electronic health record use

Alternative Payment Models3

Bundled Payments: Comprehensive Care for Joint Replacement



Bundled Payment Programs: Rapid Development, Testing and Deployment

BCPI – Model 1• April 2013 – December 2016• Discounted payments• Inpatient stay only• All DRGs

BCPI – Model 2 & 3• October 2013 – September 2018• 48 Conditions• Retrospective payments• Model 2 Inpatient to 90d post acute• Model 3 Inpatient and post acute

BCPI – Model 4• October 2013 – September 2018• Prospective payments• Inpatient, post acute, physicians• 48 Conditions

CJR• April 2016 – March 2021• Prospective payments• Inpatient, post acute, physicians• Hip & Knee replacement• 67 MSAs

Cardiac• July 2017• Prospective• Inpatient and 90d post acute• heart attack, bypass surgery• 98 MSAs

Oncology Care Model• July 2016 – June 2021• Prospective payments• Medical practice• Chemotherapy• Commercial payers aligned



Cross‐continuum, episode‐based payments

• Multiple providers at risk

• Forces coordination and collaboration within and across settings

Shifting from retrospective to prospective payment models

Shifting from experimental to mandatory

Financial incentives for hitting performance targets on quality metrics

• Phased in over time

• Additional incentives for early adopters

• Focus areas:

• Patient experience• Clinical outcomes (esp. complications)• Patient reported outcomes (emerging)

Bundled Payment Programs:Common Features and Emerging Themes

Composite Quality Score (CQS) Impact on CJR Payments

Model Year 1

Model Years 2/3

Model Years 4/5

Composite Quality Score

Quality Category

Eligible for Reconciliation Payment

Effective Discount % for Reconciliation Payment

Effective Discount % for Repayment Amount



Less Than 4 Below acceptable

No NA NA 2.0% 3.0%

4.0 to 6.0 Acceptable Yes 3.0% NA 2.0% 3.0%

6.0 to 13.2 Good Yes 2.0% NA 1.0% 2.0%

Greater than 13.2

Excellent Yes 1.5% NA 0.5% 1.5%

0% 20% 40% 60% 80% 100%

CQS WeightedMeasures

HCAHPS

RSCR

PROMs

Successful submission of PROMs and risk variable data = 2 points

Winning Strategies 4


Payment Reform: Room for Improvement. Not going Anywhere

Factors Impacting Effectiveness of Value-Based Payment Programs

Implementation process Incentive structure

Lag between performance and payment Adjustments vs. lump sum payments Size & direction of incentive

Retaining FFS architecture incentives Simultaneous quality improvement programs such as public reporting Validity, scope, & complexity of quality measurement

Outcomes-based measures Differentiation between measures for payment, public reporting, and quality

improvement Adjustment factors

Regional Sociodemographic


Health Care Payment Learning & Action Network (HCPLAN) Payment Reform Goals

Source: HCPLAN https://hcp‐lan.org/workproducts/apm‐whitepaper.pdf

Provider Accou

ntability & Inno

vatio

nIm

pact of P

aymen

t Mod

els on

Cost &

Quality

Delivery System

Integration and Co

ordinatio

nPerson

‐cen

tered care

39

OutcomesCost

Patient Experience in the Value Paradigm

Four critical success factors

• What you get paid *• What it costs you• Market share of patients

• Market share of exceptional personnel

* Mixed payment models here to stay

• Imperative to find strategies that transcend payment models

Value

Set your people up for success• Quality, safety, and experience depend on optimal work environmentAdopt evidence-based best practices• Leadership visible and visibly modeling best practices Capture caregiver perception and engagement• When it goes south, so does patient experienceCommit to zero harm• Acknowledge failure to alleviate suffering as a form of harmSegment patient experience by condition• Patient not all created equalEmbrace transparency – internal and external• Own your image and live up to it

Strategies that transcend payment models

Practice Environment Drives Success


Impact of Work Environment and Staffing on Select PX Domains

Meds Explained

Responsiveness Discharge Inst

Comm with Nurses

Work Environment Work Environment

Work EnvironmentWork Environment

63.5

65.24

78.82

86.8

Average HCAHPS Top Box Scores

43

Communication with Nurses: Significant Implications for HCAHPS

Results of Hierarchical Variable Clustering Analysis on HCAHPS Data


Discharge

MD Communication

Clean/ Quiet

Hospital Rate

Meds Explanation Pain

Management

RN Communication

Responsive

This cluster drives 15% of a hospital’s VBP score


Impact of Work Environment and Staffing on Select P4P Programs

Work EnvironmentWork Environment

AvgRe

admission Ra

te

AvgVB

P Score

Readmissions VBP

P4P Performance Generally Sensitive to Staffing, but Facilities with Below Average Staffing Can Outperform with an Optimal Environment


The Impact of Work Environment on Nurses Percetions

Work Environment

RN Perception of Quality (M

ean)

3.5



Impact of Work Environment and Staffing on Nurse Outcomes

Intent to Stay

Job Enjoyment

Work Environment Significantly Impacts both Nurses’ Intent to Stay on the Unit and their Job Enjoyment

47

Cost of Nursing Disengagement

$1,665,000For a 400 Bed Hospital

$16,650,000for a hospital system with 5,000 RNs

$22,200 Cost in lost productivity per year from each disengaged nurse

15out of every 100 nurses are

disengaged from their workplace

Capture Caregiver Perception and Engagement



Employee Engagement and HCAHPS


Net Margin – Bar Chart

0

2

4

6

8

10

12

14

Bottom Quartile 2nd Quartile 3rd Quartile Top Quartile

Mean Net M

argin (%

)

Engagement Quartile

Mean Net Margin by Engagement Quartile


Medicare Spending per Beneficiary – Bar Chart

$17,000

$17,500

$18,000

$18,500

$19,000

$19,500

$20,000

$20,500

Bottom Quartile 2nd Quartile 3rd Quartile Top Quartile

Mean Med

icare Spen

ding

per Ben

eficiary

Engagement Quartile

Mean Medicare Spending per Beneficiary by Engagement Quartile

52

Patient Loyalty and Nurse Loyalty Are in Sync


R² = 0.2548

75

80

85

90

95

100

3.5 3.7 3.9 4.1 4.3 4.5 4.7 4.9 5.1 5.3 5.5

Patie

nt Likelihoo

d to Recom

men

d (For Treatment)

Mean Score

RN Likelihood to Recommend (For Employment) Mean Score

Patient Likelihood to Recommend vs RN Likelihood to Recommend

53

RNs and Patients Tend to Agree…


87.7

85.4

90.4

93.692.6

94.9

80

82

84

86

88

90

92

94

96

Overall Patient Experience Rating Likelihood to Recommend Friendliness and Courtesy of Nurses

Mean Score

Patient Experience Scores for Top vs. Bottom Decilein RN Perception of Quality of Care

Bottom Decile (0‐9th percentile) Top Decile (90‐99th percentile)RN Perceived Quality of Care

Segment Patient Experience Data by Condition


Reduce Suffering by Meeting Patient Needs

Avoidable Suffering Caused by defects in the approach to deliver care

OUR GOAL: Prevent this suffering for patients by optimizing care delivery.

Inherent Suffering Experienced even if care is delivered perfectly

OUR GOAL: Alleviate this suffering by responding to Inherent Patient Needs.

Failing to Reduce Sufferingis a form of harm.

Suffering Associated with Treatment

Suffering Associated with Diagnosis

Avoidable Suffering Arisingfrom Defects in Care /Service


How Well Are You Meeting Patient’s Needs?

57

Meeting Patients’ Needs is Good for Business


10.0%

12.2%

12.7%

13.0%

13.2%

13.4%

13.5%

13.6%

14.1%

14.8%

10.5%

8.2%

6.6%

5.4%

4.2%

4.4% 3.6% 3.1%

3.3% 2.8%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Top 10% 2nd 3rd 4th 5th 6th 7th 8th 9th Bottom 10%

Percen

t

Decile of HCAHPS Performance

CMS Spending on Readmission & Net Margin by HCAHPS Overall Rating

CMS Spending on 30 Days Readmission Net Margin

Embrace Transparency

59

Media/Social Media: Be at the Wheel



The Rise of Consumerism: Losing Faith in Faith

61

Facebook find-a-doc

Ouch!

62

The Full Monty: University of Utah

Exceptional Patient Experience

Medical Practice Survey minimum n=30 returned in calendar yearNational Rank – compared to Press Ganey National Database: 128,705 physicians

4%9%

22%27%

46%

0%

10%

20%

30%

40%

50%

2009 2010 2011 2012 2013

1 out of 2 of our physicians are in the top 10% nationally

% o

f tot

al p

rovid

ers

1%3%

13%17%

25%

0%

5%

10%

15%

20%

25%

30%

2009 2010 2011 2012 2013

1 out of 4 of our physicians are in the top 1% nationally

Exceptional Patient Experience

Medical Practice Survey – providers must have n=30 returned in calendar yearNational Rank – compared against the Press Ganey National Database: 128,705 physicians

% o

f tot

al p

rovid

ers


Complex, yet straight forward

Thank you!

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